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How Do Bankruptcy Exemptions Work? Legal Considerations For Residents Of Monmouth County

  • By: Paul Mirabelli
How Do Bankruptcy Exemptions Work? Legal Considerations For Residents Of Monmouth County

In this article, you can discover…

  • What kinds of personal property are exempt from bankruptcy.
  • What to do if your assets exceed bankruptcy exemption limits.
  • How to correct an improperly claimed exemption after you’ve filed.

What Are Bankruptcy Exemptions?

Bankruptcy exemptions are any assets that creditors can not seek as part of the bankruptcy process. These exemptions help protect your necessary, basic, and most important assets from being sold off to repay your debts as a part of the bankruptcy process.

What Personal Property Is Exempt From Bankruptcy In New Jersey?

Exemptions are made for clothing, essential furniture, common household goods, jewelry, tools needed to do professional work, and books related to your career.

There are also exemptions for unmatured life insurance contracts and for the cash value of life insurance up to a certain amount. Social security benefits, unemployment benefits, and veteran’s benefits are also exempt.

Finally, pensions, stocks, bonus plans, a 401k, and other such assets are exempt. Proceeds from a personal injury case and retirement funds are also protected and can not be sought as part of bankruptcy.

What Happens If Your Assets Exceed The Bankruptcy Exemption Limits?

In this case, the bankruptcy trustee has the right to go after the non-exempt portion of your assets. This portion will be converted into monies that will then be available to creditors. For example, if you have extra vehicles, luxury items, or a second home, these assets will be liquidated to pay off your debts.

What Happens If You Don’t Properly Claim An Exemption During Bankruptcy?

If you forgot an exemption, you can amend your petition as long as a discharge hasn’t been issued. Even after a discharge, you have the right to reopen your case and claim an exemption that you had not previously claimed.

Some Closing Food For Thought

Many clients are unaware that they should list the awards from personal injury cases as an exemption. One client I worked with had not yet claimed his case as an exemption, and when he did, he received $27,000 out of the personal injury award. This was a significant amount of money, which helped him greatly during the bankruptcy process and beyond.

Still Have Questions? Ready To Get Started?

For more information on How Bankruptcy Exemptions Work, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (732) 733-2830 today.